And Now, How to Improve Obamacare

U.S. President Barack Obama walks away after delivering a a statement about the Supreme Court's decision on his Administration's health care law in the East Room of the White House in Washington, June 28, 2012.

It was an elegant bit of business. Chief Justice John Roberts managed to sustain the Affordable Care Act while eviscerating the political flummery on both sides of the question.

In the process, he moved the national health care conversation a quantum leap toward candor—and pointed the way toward a constructive future debate. The act was, of course, constitutional. It had to be, or else Medicare wasn’t. You can’t allow government to tax people to pay for medical care for citizens over the age of 65 and not allow government to do the same for those under 65. At the same time, and despite the best efforts of the Obama Administration to camouflage the reality of the situation, the act demanded that people pay money to be part of the system. You can call that a mandate, a fee, a penalty or an aardvark. You can also call it a tax, if it’s something you have to pay. Roberts chose to call it a tax because it was the clearest path—a superhighway, in fact—to constitutionality.

This was a huge victory for the President, but it should be a chastening one. Barack Obama and his handlers have shown a distressing tendency to not speak plainly to the American people on this crucial issue. Political courage requires clarity. The Obama Administration chose the tortured route of arguing the legality of the individual mandate via the interstate commerce clause for one simple reason: it did not want to take the political risk of allowing opponents to call it a tax increase. That was stupid. The Republicans were calling it a tax increase anyway.

There is still an odor of obfuscation around Obamacare. But there is a chance for the President to clear the air a bit, in the same way that Roberts did. He can find ways to make it more palatable to conservatives. He can move it closer to the vision of the original Heritage Foundation individual-mandate plan. If he’s smart, the President will quickly give a speech acknowledging the contentiousness of the past three years and the validity of some Republican arguments against his plan. To that end, he could propose four amendments:

Enact medical-malpractice reform. Indeed, the President already conceded this point to the Republicans, but they’ve been loath to accept it. An incalculable, perhaps huge, cause of wasteful medical spending is the extra tests and -procedures that doctors perform to protect themselves from lawsuits. It should still be possible to sue a doctor who has been grossly negligent, but the standards for such suits should be tightened mightily.

Make it a real market. Only dedicated policy wonks know what the health care exchanges—the central market mechanism in the act—actually do. Perhaps we should rename them health care supermarkets. Their purpose is to lower premiums by giving individuals and small employers the same market clout that General Motors and Time Warner have. For these supermarkets to actually work, though, they need to offer a range of competitive products. Obamacare left it to the states to build their own markets. That’s not such a good idea. According to the Kaiser Family Foundation, people in more than 30 states are subject to near monopolies dominated by a single insurer. We should scrap the state exchanges and make it one big national Walmart of health. Republicans should love this. It’s all about more competitive markets.

Follow Roberts on Medicaid. One of the worst aspects of Obamacare was that it moved 30 million people into Medicaid, a very troubled program. The states rebelled against this mandate, and Roberts ruled they could opt out. Obama should give states the option to move their Medicaid recipients into the health care supermarket system. This may cost money, but the President could twin it with another necessary reform: taxing the health care benefits provided to workers by employers (on a sliding, progressive scale).

Pay doctors’ salaries. The current fee-for-service system encourages waste. It rewards doctors for each test and procedure they order. This is the single biggest cost driver in the system. You can’t just abolish fee-for-service medicine, though. That would be, er, unconstitutional. But the President can double down on the existing pilot programs in Obamacare that encourage doctors to move into salaried systems.

The Republicans would, no doubt, screech and holler and oppose all the above. They always do. But it would put the President on firmer policy and political ground. A final word of warning to the GOP: Think twice about bringing up Obamacare for repeal in the House on July 11. It’s a gimmick, a waste of time. As we learned in the recent Wisconsin recall election, the public hates gimmicks. A word to Mitt Romney as well: Be happy, dude! Roberts proved that your Massachusetts health care plan is constitutional too.